I look at it this way: Before the change fighting was 10 times as effective as catering, now it is down to 5 times. But definitely no reason to stop fighting.
And space use is way higher for caterers, all those rows of factories and houses to keep the pop for all those factories. The AWs would be a better argument. You could skip all (or nearly all) AWs and keep the costs down that way... You would have to stay low chapter and place as few expansions as possible, but why not give it a try? It would be probably a very useful town for a tourney focused FS, maybe for someone who is bored playing their main city it could be a fun side project? But as a main town I think it would get old rather soon. What would you do with it on a daily basis? Sure quickly cater through the tourney each week, you will have a far above average score, but not enough provinces to compete for the top. Apart from that? can´t use the KP for anything (no research and no AWs), maybe also play the spire for the fun of it (and the diamonds), but most of the rewards (I guess you could time boost some 3h productions on your factories?) will also be pointless. Is that enough to keep your interest for long?